Free Cost Accounting MCQs with Answers
941 Cost Accounting MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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941 questions · page 12 of 48
- A. $60
- B. $90
- C. $80
- D. $70
Explanation: The overhead rate is calculated as actual overhead divided by the allocation base: $225,000 ÷ 2,500 labor hours = $90 per labor hour.
Correct answer: $90- A. over allocated budget
- B. under allocated budget
- C. under allocated indirect cost
- D. over allocated direct costCompare Credit Cards
Explanation: When allocated indirect cost is less than the actual indirect cost incurred, the difference is underallocated indirect cost.
Correct answer: under allocated indirect cost- A. job cost record
- B. job cost sheet
- C. source document
- D. both a and b
Explanation: A job cost sheet or job cost record accumulates all direct materials, direct labour and applied overhead assigned to a particular job.
Correct answer: both a and b- A. cost
- B. job
- C. post
- D. price
Explanation: A job is a distinct unit of service or production, whether it consists of one unit or several identical units completed for a specific…
Correct answer: job- A. per unit cost
- B. per post cost
- C. per price cost
- D. application cost
Explanation: When similar units are produced, total cost is divided by the number of units to obtain an average cost per unit.
Correct answer: per unit cost- A. direct pool
- B. cost pool
- C. indirect pool
- D. item pool
Explanation: A cost pool is a group of related individual costs collected for later allocation to cost objects.
Correct answer: cost pool- A. incurred indirect cost
- B. over allocated indirect cost
- C. applied indirect cost
- D. applied direct cost
Explanation: When applied or allocated overhead exceeds the actual indirect cost incurred, overhead is over-allocated, also called overapplied…
Correct answer: over allocated indirect cost- A. cost allocation
- B. sales tracing
- C. sales allocation
- D. cost tracing
Explanation: Cost allocation assigns an indirect cost to a cost object using a reasonable allocation base because the cost cannot be traced directly.
Correct answer: cost allocation- A. relevant total costs
- B. contribution costs
- C. throughput costs
- D. optimized costs
Explanation: Relevant total cost in inventory decisions combines relevant ordering costs with relevant carrying or holding costs.
Correct answer: relevant total costs- A. carrying costs
- B. relevant total costs
- C. economic order quantity
- D. reorder point
Explanation: The reorder point equals demand during the purchasing lead time, calculated as lead time multiplied by usage or sales per unit of time.
Correct answer: reorder point231. The reorder point is divided by number of sold units for per unit of time to calculate ___________?
- A. relevant carrying cost
- B. relevant ordering cost
- C. purchase order lease time
- D. number of purchase orders
Explanation: Dividing the reorder point by demand per unit of time gives the purchase-order lead time.
Correct answer: purchase order lease time- A. chaining point
- B. recording point
- C. lead point
- D. trigger point
Explanation: A trigger point is the stage in the manufacturing cycle that initiates the relevant accounting journal entries.
Correct answer: trigger point- A. in-time costing
- B. trigger costing
- C. back flush costing
- D. lead time costing
Explanation: Backflush costing postpones or omits many routine journal entries until the later stages of production or sale, using fewer accounting…
Correct answer: back flush costing- A. purchase order costs
- B. relevant inventory carrying costs
- C. irrelevant inventory carrying costs
- D. relevant ordering costs
Explanation: Relevant inventory carrying cost includes the opportunity cost of capital tied up in inventory plus other incremental carrying costs, such…
Correct answer: relevant inventory carrying costs- A. annual irrelevant ordering costs
- B. annual relevant carrying costs
- C. annual relevant ordering costs
- D. annual irrelevant carrying costsFinance
Explanation: Multiplying average inventory by the relevant carrying cost per unit gives the annual relevant carrying cost.
Correct answer: annual relevant carrying costs- A. supply chain
- B. value chain
- C. material flow chain
- D. manufacturing flow chain
Explanation: A supply chain covers the flow of materials, goods, services and information from suppliers through production and distribution to…
Correct answer: supply chain237. The required rate of return, is multiplied per unit cost of purchased units to calculate __________?
- A. irrelevant inventory carrying costs
- B. relevant opportunity cost of capital
- C. relevant purchase order costs
- D. relevant inventory carrying costsFinance
Explanation: The opportunity cost of capital tied up in purchased inventory is calculated by multiplying the required rate of return by the cost of the…
Correct answer: relevant opportunity cost of capital238. The cost of product failure, error prevention and appraisals can be classified under ___________?
- A. stocking costs
- B. stock-out costs
- C. costs of quality
- D. shrinkage costs
Explanation: Costs of product failure, error prevention and appraisal are components of the costs of quality.
Correct answer: costs of quality- A. 678 packages
- B. 648 packages
- C. 658 packages
- D. 668 packages
Explanation: Economic order quantity is √(2DS/H), where D = 25,000 units, S = $210 and H = $25: √(2 × 25,000 × 210 ÷ 25) ≈ 648 packages.
Correct answer: 648 packages- A. decisional management
- B. throughput management
- C. inventory management
- D. manufacturing management
Explanation: Inventory management covers planning, coordinating, and controlling the movement and level of inventory.
Correct answer: inventory management